- Date : 12/09/2019
- Read: 4 mins
It is still possible to file your Income Tax returns for the previous financial year, but it will incur a penalty for late ITR filing. Here's how…
If you are a registered taxpayer with the IT department, you would have been bombarded with e-mails and text messages practically every other day to file your tax returns before the due date. On account of the Covid-19 lockdown, the government had extended the last date for filing the returns for FY 2019-20 from July 31 to November 30, 2020. This was done to provide a breather to all citizens after the preventive lockdown pretty much brought all economic activities to a standstill, giving people enough time to get back on track.
Missed deadline
If you miss the ITR deadline, you could still file your overdue tax returns for the previous financial year, but this would incur a penalty for late ITR filing. Till Assessment Year (AY) 2017-18, there was no penalty for filing delayed returns. However, the government made amendments to the Finance Act 2017 and inserted a new section – 234F according to which an individual would have to pay late fee for ITR filing along with the additional tax liability.
Related: How to use the new ITR Form?
What is the penalty for late ITR filing?
As per Section 139(1) of the Finance Act, if you are filing the return after the ITR deadline but within three months of the deadline, the penalty will be Rs 5000. In case the returns are filed between three to six months since the deadline, the penalty doubles to Rs 10,000. The only respite is for people who have a declared income below Rs 500,000, in which case a penalty of Rs 1000 will be levied.
This was the prescribed penalty structure for AY 2019-2020 and is subject to further clarifications from the government considering the special circumstances.
If a penalty is levied for AY 2020-21, you may also have to additionally pay interest at 1% per month or part of the month, on tax due under Section 234A. If the taxes have been paid and only filing the ITR is pending, then there will not be any interest implication.
The interest rate is calculated from the end of the deadline to the actual date of filing returns on a simple interest basis.
Filing belated returns
The procedure for filing belated returns is no different than filing the return on or before the due date. The only difference is while filing belated returns you have to select ‘Return filed under section 139(4)’ from the drop-down menu. Please ensure you are only filing ITR forms relevant to the financial year and not of the preceding year.
Once you have filed your returns, you will have to verify it as well (ITR-V). The IT department only starts processing your returns once you do so. You have 120 days from the date of filing to get the returns verified. You can e-verify the returns via multiple channels, such as the Income Tax website, Aadhaar OTP or net banking channels. Refunds, if any, will be processed only for returns that have been verified.
Related: Types of ITR Forms that every taxpayer should know about
Other repercussions
Filing returns after the deadline may create additional issues for you. The IT Department may take more time in processing your returns, and your refunds could get delayed further. Similarly, losses under any head of income other than those from house property cannot be carried forward if the taxes have not been filed before the due date. This becomes especially critical for individuals with operating business losses or that of capital gains - say on account of equity trading.
In closing
Even though the tax department has a provision for filing belated returns, it is best to adhere to the mentioned timelines. Not only would you incur a penalty plus interest on your tax obligation, it could also bring you under scrutiny. Have a look at how to file your Income Tax Returns (ITR) Online to develop a comprehensive understanding of the process.
If you are a registered taxpayer with the IT department, you would have been bombarded with e-mails and text messages practically every other day to file your tax returns before the due date. On account of the Covid-19 lockdown, the government had extended the last date for filing the returns for FY 2019-20 from July 31 to November 30, 2020. This was done to provide a breather to all citizens after the preventive lockdown pretty much brought all economic activities to a standstill, giving people enough time to get back on track.
Missed deadline
If you miss the ITR deadline, you could still file your overdue tax returns for the previous financial year, but this would incur a penalty for late ITR filing. Till Assessment Year (AY) 2017-18, there was no penalty for filing delayed returns. However, the government made amendments to the Finance Act 2017 and inserted a new section – 234F according to which an individual would have to pay late fee for ITR filing along with the additional tax liability.
Related: How to use the new ITR Form?
What is the penalty for late ITR filing?
As per Section 139(1) of the Finance Act, if you are filing the return after the ITR deadline but within three months of the deadline, the penalty will be Rs 5000. In case the returns are filed between three to six months since the deadline, the penalty doubles to Rs 10,000. The only respite is for people who have a declared income below Rs 500,000, in which case a penalty of Rs 1000 will be levied.
This was the prescribed penalty structure for AY 2019-2020 and is subject to further clarifications from the government considering the special circumstances.
If a penalty is levied for AY 2020-21, you may also have to additionally pay interest at 1% per month or part of the month, on tax due under Section 234A. If the taxes have been paid and only filing the ITR is pending, then there will not be any interest implication.
The interest rate is calculated from the end of the deadline to the actual date of filing returns on a simple interest basis.
Filing belated returns
The procedure for filing belated returns is no different than filing the return on or before the due date. The only difference is while filing belated returns you have to select ‘Return filed under section 139(4)’ from the drop-down menu. Please ensure you are only filing ITR forms relevant to the financial year and not of the preceding year.
Once you have filed your returns, you will have to verify it as well (ITR-V). The IT department only starts processing your returns once you do so. You have 120 days from the date of filing to get the returns verified. You can e-verify the returns via multiple channels, such as the Income Tax website, Aadhaar OTP or net banking channels. Refunds, if any, will be processed only for returns that have been verified.
Related: Types of ITR Forms that every taxpayer should know about
Other repercussions
Filing returns after the deadline may create additional issues for you. The IT Department may take more time in processing your returns, and your refunds could get delayed further. Similarly, losses under any head of income other than those from house property cannot be carried forward if the taxes have not been filed before the due date. This becomes especially critical for individuals with operating business losses or that of capital gains - say on account of equity trading.
In closing
Even though the tax department has a provision for filing belated returns, it is best to adhere to the mentioned timelines. Not only would you incur a penalty plus interest on your tax obligation, it could also bring you under scrutiny. Have a look at how to file your Income Tax Returns (ITR) Online to develop a comprehensive understanding of the process.
